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The artificial intelligence (AI) data decision-making company Palantir (NASDAQ: PLTR) will report its 2026 first-quarter earnings after the market closes today, followed by a conference call with Wall Street analysts led by CEO Alex Karp.
The high-flying AI company has seen its stock go up and to the right for much of the past several years, but has slumped lately, with its stock down over 13% this year. Palantir, which has long traded at a high valuation, has struggled as AI stocks and valuations have come under pressure.
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Palantir also heads into earnings amid recent analyst concerns. On May 1, HSBC analyst Stephen Bersey downgraded the stock from a buy rating to hold, also cutting his price target by $54 to $205 per share.
Bersey is concerned that AI competitors have seen Palantir's success in making its AI coding capabilities accessible to those without AI coding experience and are now seeking to replicate it.
Similar capabilities are now being offered by the likes of OpenAI and Anthropic, according to Bersey, which could erode Palantir's moat and barriers to entry, potentially driving down the company's valuation.
Here's how Palantir can impress the market.
According to Barron's, consensus estimates call for Palantir to report adjusted earnings per share (EPS) of $0.28, revenue of roughly $1.5 billion, and a 54% free cash flow margin.
These results would certainly be extraordinary, as they would represent 115% year-over-year adjusted EPS growth, 75% revenue growth, and a 700-basis-point (7%) expansion in free cash flow margin.
Unfortunately, the company is likely going to have to do more than just beat estimates if it wants a positive reaction from the market. That's because of Palantir's incredibly high valuation, which can be more of a curse than a blessing at times.
In my view, Palantir will also need to deliver strong second-quarter guidance and possible even raise its full-year guidance. In the second quarter, consensus analyst estimates call for nearly $1.68 billion in revenue and $950 million in adjusted income from operations, according to data from Visible Alpha.
Here is Palantir's full-year guide from management, along with Visible Alpha estimates:
Revenue between $7.182 and $7.198 billion.
U.S. commercial revenue to grow at least 115% to at least $3.144 billion
Adjusted income from operations between $4.126 and $4.142 billion.
Adjusted free cash flow of between $3.925 and $4.125 billion.
As you can see, consensus estimates project that Palantir will beat the top end of management's full-year internal guidance for revenue and adjusted income from operations, while falling in the middle of the guide on adjusted free cash flow and slightly below U.S. commercial revenue.
Providing forward guidance that beats or misses consensus estimates by even just a little bit can move a stock in a big way, depending on broader sentiment. Leaving guidance unchanged also may not be enough to win over investors right now.
While all of these numbers matter, I think forward guidance for full-year U.S. commercial revenue that beats Wall Street estimates would give investors more confidence that the company has maintained its moat, at least for the time being.
Ultimately, I'm still very cautious on the name given the elevated valuation, and don't recommend investors try to trade the stock on a near-term event like earnings.
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HSBC Holdings is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.
Palantir Reports Earnings After the Bell. Here's How this High-Flying Artificial Intelligence (AI) Stock Can Impress the Market was originally published by The Motley Fool